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The withdrawals happened because the client base was sophisticated enough to realize (based on publicly available information), and interconnected enough to com
by TechBro8615 4y ago
The withdrawals happened because the client base was sophisticated enough to realize (based on publicly available information), and interconnected enough to communicate to each other, that the bank was insolvent. But it's not the client base that caused the bank to be insolvent. That was entirely the fault of the bankers.
- TheAlchemist 4y agoThe bankers did a very poor job here, for sure ! But it was far from insovlent - it was insovlent if everybody decided to pull out their funds at once - which is what happened. Not a single bank could withstand that. But so did the client base - we're not talking about small depositors here - if I read the documents correctly, Circle had >8B $ in SVB and they moved 5B $ before the week-end. It was a handful of wealthy individuals that organized this bank run.
- UncleEntity 4y ago> it was insovlent if everybody decided to pull out their funds at once Which is the definition of insolvent. A normal bank just goes to the Fed as the lender of last resort but, apparently, they won’t lend money to insolvent banks so here we are.
- HDThoreaun 4y ago> Not a single bank could withstand that. Wrong. Banks whose assets are worth more than liabilities can get unlimited low interest loans from the fed.